Comment: India remains challenging despite relaxation of rules

This week’s Retail Leadership Summit in India showed the playing field remains as level as it ever was between multinationals and Indian retailers, but that the turnstile is open.

The annual event, organised by the Retailers Association of India, brought together the great and the good of the nation’s retail sector gathered for the first time since restrictions on foreign direct investment in to India’s retail sector were relaxed late last year.

The event gathers together the usual mix of business school students, chief executives, marketing gurus, and “honchos” of all stripes. The conference chat is still of a confident, modern India defined by a youthful population, an increasingly wealthy urban middle-class, and a western willingness to spend, spend, spend. Consumer optimism remains stubbornly high and life expectancy is rapidly improving; it is the same old story we’ve heard for at least a decade.

But there’s a difference this time. India’s retail sector is no longer a closed shop and local operators will increasingly go toe-to-toe with the big beasts of global retailing.

Are Indian retailers nervous? Will they shy away from the challenge? Not a bit of it.

The truth is that, despite the Foreign Direct Investment (FDI) ruling, the same old problems persist – unfit infrastructure, absent supply chains, a relatively small and fragmented consumer market, a byzantine system of taxation and licenses, and, worst of all, corruption at all levels.

Such seemingly intractable problems are what await the brave brands and retailers who choose to exploit the FDI ruling and finally tackle the subcontinent. Those international retailers who have expressed an interest in rolling out stores across India including Walmart, IKEA and Tesco, which currently has an Indian franchise named Star Bazaar, will have to compete with these ongoing issues.

The ability to navigate through these issues is the ace up the sleeve of each and every successful Indian retailer.

At least for now, Indian retailers seem not the least bit concerned at the prospect of competing with western retailers. No knees are trembling in fear in this conference hall and with good reason.

The question is, how long the advantage can remain exclusively Indian? This is something the Indian government cannot legislate for.

Alex Leftwich is chief executive of Retail Management Consultants